Aer Lingus returns to profit
Irish airline Aer Lingus returned to profit in 2010 despite a 10% drop in passenger numbers but higher fuel prices mean that 2011 operating profit is likely to be lower.
The yield per passenger rose 12% to €107.12 each so there was a 1% increase in overall revenue to €1.22bn. A 10% fall in operating costs helped Aer Lingus swing from a loss of €154.8m to a pre-tax profit of €30.4m in 2010. There was €46.5m of cash generated from operations in the year and there was net cash of €310m.
There was a loss in the fourth quarter but it was sharply lower than the one reported in the fourth quarter of 2009.
The drop in passenger numbers was partly down to ash and weather disruptions as well as the weak Irish economy. That knocked €10m off profit. There were also €20m of additional losses from certain Shannon and Gatwick routes. The transatlantic business returned to profit despite a sharp decline in long haul passengers. That was because the average long haul fare was 19% higher.
The 2010 loss includes the €32.5m provision for tax and costs relating to the redundancies of staff who immediately took other jobs at the airline.
Cargo revenues grew from €34.3m to €41.3m but this is still a modest percentage of the whole business.
There should be more benefits to come from cost reductions. However, fuel costs fell last year and these could be higher in 2011. Aer Lingus has forward-bought 62% of its 2011 fuel requirements. The airline is also concerned about increasing airport charges.
Aer Lingus is assuming that passenger numbers should recover by around 5% in 2011 but it is still reducing the long haul fleet by one aircraft. Yield increases are likely to be smaller than last year.
The first quarter will be weak due to weather and strike disruptions.